WALNUT CREEK -- New Safeway and Whole Foods stores on the city's east side would lead to a supermarket smackdown that could leave nearby Nob Hill as the odd store out, according to a new study.

The potential for "urban decay" near the intersection of Ygnacio Valley and Oak Grove roads is examined as part of a draft environmental study for a 25-acre Safeway-owned parcel in the Shadelands Business Park. The urban decay study is just part of a 3,000-page document which details the environmental impacts of a retail and housing development. Currently the site is part open space and part Safeway office buildings. The study explicitly finds that while stores may close, the new project won't cause economic blight.

Safeway's plans call for a 219,000-square-foot development called The Orchards. It would be anchored by the grocery store and include restaurants, open space, retail shops, a health club and a senior housing center. The Shadelands plan will likely be in front of the City Council this summer.

While some in the area are clamoring for a new Safeway -- the one at the nearby Encina Grande shopping center is more than 40 years old -- the project has sparked some controversy with a vocal group of opponents who don't see the need.

Whole Foods has plans to open its own store at Encina Grande, once Safeway moves out and builds its new store across the street in 2015. That would put three grocery stores basically across the street from one another, and a Trader Joes less than a mile away on Oak Grove.

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"The urban decay (study) confirms what the community's concerns have been for the last two years," said Steve Elster, who lives in the nearby Woodlands neighborhood behind Nob Hill. "The inclusion of another supermarket will lead to the closure of Nob Hill and further undermine the other tenants. They are more than doubling the grocery store supply and this area cannot handle that."

Safeway officials view The Orchards differently, saying their customers have been wanting a new store for years and that their lease is up at Encina Grande. The community will see exciting changes with the completion of a new shopping center, Safeway Spokeswoman Wendy Gutshall said in an email.

"The neighborhood is going to see a lot of exciting changes with the addition of The Orchards and will benefit from many new stores with a completely renovated Encina Grande Shopping Center," said Safeway Spokeswoman Wendy Gutshall in an email. "The demand for additional retail and shopping options is strong, and will continue to grow as the economy improves."

The Orchards would generate $82.7 million a year in sales, and 80 percent of its customers would be from the immediate area, according to the study.

The Orchards will not cause or contribute to urban decay, but Nob Hill will likely see a decrease in sales and could close, as could other retail stores in the area, according to the study.

The study points out that those vacant spaces wouldn't stay empty long, and thus The Orchards wouldn't cause urban blight.

In a statement, a Nob Hill spokeswoman said the company does not comment on competition but is confident in its customer base, which the company has¿ built at the Walnut Creek store since 1996.

Kassie Wenzell, who lives in the Northgate neighborhood, agrees. She says the fears over stores closing are baseless because where people shop is behavioral. This is why she wants a new Safeway, because the neighborhood has outgrown the Safeway at Encina Grande and for big grocery store trips she often goes to Clayton and Concord.

"We go out of Walnut Creek and that means spending hundreds in a different tax base and I don't want to do that," Wenzell said.

She is also excited about a place nearby to safely walk, go out to eat and have a cup of coffee near her home.

The mammoth draft environmental report looks at many other issues, including traffic, which has been another worry for area residents. The report concludes the intersection of Ygnacio Valley and Oak Grove Road already struggles to handle existing traffic. But there will be no serious impacts from the project, the study says, as long as Walnut Creek makes improvements that are part of its 10-year capital improvement plans.

The traffic analysis says there could be an increase in traffic on neighborhood streets near the site, mostly local residents going to The Orchards.

The 45-day public review of the draft environmental impact report runs until Feb. 20. For more information go to www.walnut-creek.org and click on "quick links" and then "Shadelands Specific Plan."